What does the 'amount of insurance' refer to in a title insurance policy?

The 'amount of insurance' in a title insurance policy refers specifically to the amount stated in Schedule A. This figure represents the maximum liability of the title insurance company in the event a claim is made against the property ownership. It is crucial because it determines the coverage limit for any potential issues related to the title, such as defects, liens, or encumbrances that may arise.

This amount is typically based on the purchase price of the property or the amount of the loan if it's a refinance, reflecting the level of risk that the insurance company assumes. The relationship between the policy amount and the value of the property highlights the importance of accurate reporting in the title insurance process.

Other options do not accurately encapsulate the meaning of 'amount of insurance.' For instance, the total appraisal value of the property might influence the amount stated in the policy, but it does not directly equate to the amount of insurance. The total cost of title insurance services pertains to fees and charges associated with obtaining the insurance but does not denote the coverage itself. Similarly, while the amount of the mortgage loan taken may affect the policy amount, it is not the definitive factor outlined in the title insurance policy.